Corporate law departments and claims departments of insurance companies (collectively, “companies” or “clients”) have used matter management systems to track information about legal matters and projects (collectively, “matters”). One of the major weaknesses of these systems is that the information stored in these systems can be initially inaccurate, partially incomplete, and/or not kept updated and current. Unless the important matter data for a company's matters is accurate and kept current, reports based on this matter data are unreliable.
There are many reasons why the data is not accurately provided or kept current during the life of a matter. One reason is that although the data about the matter already exists, it has to be reentered into the system. For example, if a law firm manages a matter for a company, the law firm will have information about the current status of the matter. If the law firm does not have access to a company's matter management system, however, the law firm must first send a status report to the company in the mail or via electronic mail, and then the company has to reenter the data into the company's matter management system. Because of heavy workloads and the need to reduce expenses by minimizing employees, companies frequently never reenter the data into the matter management system, causing the system to have incomplete and missing data.
Second, some outside vendors may not appreciate the importance and detrimental consequences to a company if its matter management system does not have accurate and current data. Consequently, outside vendors (i) fail to provide data that the company has specifically requested to track in its matter management system and/or (ii) do not take the time to provide accurate data to the company and update such data when necessary. If a matter management system makes the outside vendor directly responsible for providing the data and provides feedback to the outside vendor responsible user about the accuracy of the information, or provides a method to prompt the outside vendor to review the information, the outside vendor responsible users are more likely to provide accurate information and keep such information current.
Third, if a company has not received data from an outside vendor managing a matter that the company would like to maintain in the company's matter management system, many companies do not have the time or willingness to repeatedly follow up with the firm to provide such data. For example, some companies desire that the law firm representing the company in a litigated matter provide a detailed case analysis and assessment 30-60 days after the case has been initiated. Informal surveys of such companies, however, reveal that in many situations the company never receives such an assessment from its law firm handling the case.
Fourth, many matter management systems have a set of fields that must be completed to create a matter on the system, but some types of data are not immediately available, and may not be known or reasonably provided until weeks or even months after the matter has commenced. An example of this type of information includes an estimate of exposure in a litigated matter, because the person providing the information has not had a reasonable opportunity to investigate the facts or the law affecting the litigation. Consequently, if a single form is used to input all of the information about a matter at the inception of the matter, users will frequently put in inaccurate or “dummy” information with respect to information that cannot be reasonably known or provided until weeks or months later. If a user forgets to update the inaccurate or “dummy” data, and the system does not prompt the user to review and/or update the data, the data will never be corrected in the system.
Finally, some of the information about the matter may change during the life of the matter. Frequently, however, users will forget or fail to update such information, and therefore the information does not remain current and accurate.
Corporate law departments and claims departments of insurance companies also try to use the data in matter management systems to develop metrics to analyze attorney performance on legal matters. These performance metrics depend upon the accuracy of the data in the matter management system, and are important for several reasons. During the life of a matter, metrics can be used to better assess the likely performance and results achieved by an outside vendor. Also, by analyzing the metrics of resolved matters, corporate law departments and claims departments can better select the best performing outside counsel for new matters.
Many companies have tried to create metrics that compare spending by the type of legal matter (herein called “fee-based metrics”). An example of a fee-based metric is the average outside vendor fees and expenses relating to the cost of defending a breach of contract action. In theory, this benchmarking or averaging information could help identify law firms that are more expensive and less efficient at defending such breach of contract cases. However, there are several limitations and disadvantages to fee-based metrics.
The fundamental weakness of fee-based metrics is “apples-to-oranges” comparisons. In other words, because no two matters are exactly identical, efforts to compare similar matters are inherently problematic. For example, although two cases might involve an alleged breach of contract, one case may involve counterclaims for contributory negligence and the other case may revolve around the defense of waiver of a condition precedent. Furthermore, fee-based metrics are inconsistent because the fees and hourly rates of outside vendors vary by geographic region. For example, the hourly rates of a partner in a New York City law firm are significantly higher than a partner in a Portland law firm.
Some fee-based metrics attempt to use codes to make consistent comparisons between matters or tasks performed during the life of a matter. For example, the American Bar Association (ABA) has developed codes to measure fees and expenses with respect to different aspects of a matter called the “Uniform Task-Based Management System” (UTBMS Codes). The ABA describes the purpose of the UTBMS Codes as follows: “The Uniform Task-Based Management System is a budgeting and billing system designed to provide companies and law firms with meaningful cost information on legal services.” One of the stated goals of the UTBMS Codes is to “Macilitate effective communication of the tasks and costs of litigation and any variations from the expected or the norm.” However, users of the UTMBS codes have found the codes ambiguous, overlapping, and confusing. Even the ABA's description of the UTBMS Codes recognizes this problem: “It is recognized that not all litigation work will fit neatly in a particular category. Work can overlap tasks, categories may be imprecise, or time may be expended on the truly unusual. Users should categorize the work to its primary purpose. Definitions are provided for guidance. Where uncertainty envelops substantial or repeating work, it is best for client and counsel to agree in advance on the category to be used.” Because the UTBMS Codes can be ambiguous, overlapping, and confusing to users, even fastidious and good-faith users may apply them inconsistently. As a result, use of the UTBMS codes may result in unreliable baselines or “norms.”
While even specialized coding systems have shown to be problematic to apply, such coding systems such as the UTBMS Codes are often burdensome, and require extensive extra work by outside vendors. For example, the UTBMS specification requires “the time charges by attorney or other professional are recorded by task.” Consequently, an attorney must provide a separate fee line-item in an invoice for each task, and provide both a task and activity code for such line item. Because of the extensive time that this requires, many law firms will delegate the task of splitting up time entries and assigning task and activity codes to staff. In many situations the staff will not know how to properly divide up the time, or properly specify the UTBMS Codes for each line-item. Consequently, because of the burdens of providing the coding information, it is performed by users who do not have the knowledge about the work performed to apply the codes properly, do not apply the codes with appropriate care, or do not know how to apply the codes properly.
Other types of performance metrics are also problematic. For example, some performance metrics attempt to develop a “win-loss” record in legal litigation. However, whether an outside vendor produced a win or a loss is frequently hard to quantify. For example, settling a case for its defendant for $100,000 may be a tremendous outcome (because had it gone to trial the resulting verdict may have been significantly higher), while in another case obtaining a jury award of $50,000 for its plaintiff might be a poor outcome because the outside vendor convinced the company to turn down a settlement offer payment of $200,000.
Accordingly, a software facility that overcame some or all of the aforementioned shortcomings relating to the accurateness and currentness of information in a matter management system and, in some cases, also used the more accurate and current data to create more reliable performance metrics, would have significant utility to corporate law departments, claims departments of insurance companies, and other companies managing projects.